"Accountability and ethics in a big four organization A case study which discusses the role of accountability and ethics within a big four organization and how these variables influence behavior. "

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Accountability and ethics in a big four organization

A case study which discusses the role of accountability and ethics within a big four organization and how these variables influence behavior.

Master Thesis Economics, 2018-2019 Specialization: Accounting and Control

Author: Nick Omes, s4490134

Supervised by: Prof. Dr. E.G.J. Vosselman (Ed) Second reader: J.S. Drost MSc (Jacqueline)

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Abstract

This study is focused on how accountability and ethics are related and how that relationship does influence behavior in a big four firm. A case study is carried out in the audit department of a big four firm in the Netherlands. During the field study it was clear that the increased rules and regulations have a significant impact on the accountability and ethical programs within the firm. As a result of the increased rules and regulations the big four firm is mainly focused on

instrumental accountability and contract ethics. However, there are characteristics of relational response-ability and virtue ethics present in the big four firm as the employees are internally looking at the processes when an error occurs and create a culture that trusts the auditors.

However, it is questionable if this has a big influence on the behavior within the firm as the main focus is complying with the rules and regulations the organization has to deal with.

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Introduction

Accountability and ethics have become important in our society. Third parties require

representations in the form of words, figures and numbers (Mansouri & Rowney, 2014). The collapse of Enron and Royal Ahold are examples of corporate governance failures and show the importance for a good accountability and ethics program. The auditor of Enron, Arthur Anderson, turned blind eye towards the accounting practice that was improper but got actively involved in forming a financial structure that was complex and transactions that led to deception. In the Enron case the internal audit committee and external auditor firm were held accountable for the financial statements (Benston & Hartgraves, 2002). Both parties acted unethically which eventually led to bankruptcy of one of the biggest corporations of that time. The meltdown of Enron has necessitated reform in the corporate governance worldwide ensuring companies hold an accountability of every move it makes (Benston & Hartgraves, 2002) and focus on ethics of organizations (Kaptein, 2010). It is not enough to only follow the letter of the law for accountants and auditors, but also should not violate the spirit of the law (Duska, 2005). The responsibilities for external auditors are evaluating the financial statements and declaring it represents a fair picture of a company for the using public. Secondly, auditors should be a watchdog to detect error, irregularities and/or fraud (Duska, 2005). Accountability is a construct of accounting which refers to counting and measurement to calculation and valuation. It plays an important role to provide essential knowledge for the governance and control for the organization (Ahrens, 1996). Transparency becomes the remedy for the organizational failures, whilst we acknowledge that full transparency is impossible (Roberts, 2018). It is reasonable to demand more accountability however, it may become a problematic practice if it does not acknowledge its own inherent limits as an ethical practice (Messner, 2009).

This study will focus on the accountability and the ethics within a big four organization by doing an interpretive research project. A case study is carried out in the audit department of a big four firm which will try to provide a narrative on how accountability and ethics shape the

practices. The way accountability is enacted is influenced via external parties (i.e. the regulatory institutions and the clients) and internally as the auditors have to account for their actions. From a scientific point of view this is interesting because few research is carried out about

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accountability and ethics within a big four firm. This study contributes in a way that it shows how the accountability is enacted and how it enables and/or hinders certain ethical behavior within a big four firm. Ethics within organization have become more important over the years as legal and stakeholders are putting pressure for a good ethics program. New laws and regulations have been implemented to improve the ethics within organizations for instance the Sarbanes-Oxley Act in 2002 (Kaptein, 2010). Organizations see the benefits of implementing an effective ethics program (Kaptain, 2010). The way accountability is implemented in an organization can have a big

impact. For example, Keevers et al. (2012) elaborates on what happens when practices of results-based accountability (RBA) are translated to social justice practices in local community

organizations. This paper argues that in RBA there was a focus on quantitative data and

qualitative data was devalued, while workers in the organization saw that qualitative data was the only way in which progress could actually be observed. So, there is a mismatch between the accountability system which is output-related and the practices in the organization. The big four firm may be too focused on quantitative measures in maintaining high quality whilst qualitative data may increase the quality of the work. Another way to look at accountability is from a relational perspective, where it is a performative act (Wolters, et al., working paper). From that point of view accountability is not instrumental but relational where it is influenced by how the professionals carry out activities regarding their profession. In addition due to the accounting scandals the activities that an auditor has to perform is increased. Nowadays the accountancy firms do not only evaluate whether the financial statements are right or wrong but provide assurance regarding business risks and fraud (Knechel and Salterio, 2017). As a consequence of the pressure of stakeholders and regulators the range of duties is expanded, arguable is to what extent that is affecting ethical behavior.

Furthermore, this study has practical relevance because it may be a tool for big four organizations in determining what is important for maintaining or ensuring high standards of accountability and ethics by doing an interpretive study. The literature review and case study can help big four firms to think about how the high accountability standards may have an impact on the ethical part of the organization. Additionally, this study may help audit firms in decision-making regarding their internal and external accountability and ethics systems.

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In order to research accountability and ethics in a big four firm the following research question is formulated: ‘How are accountability and ethics related and how does that relationship influence behavior in a big four firm?’

This study will start in the next chapter with a literature review, which will elaborate how accountability and ethics are related. It will firstly discuss the different streams of accountability and ethics, and then show the relation between the variables. In addition, a framework of

accountability and ethics is constructed that will be used in the field study. Secondly, the method and methodology of this paper is explained in the third chapter. A case study is carried out which will discuss how accountability and ethics are linked within a big four firm and how it will influence behavior. Accountability is affected internally as targets need to be reached by

employees, externally because auditors need to comply with rules and regulation and need to be accountable for their actions towards the client (Knechel and Salterio, 2017). In order to answer the research question an interpretive study is carried out. Using an interpretive research it is possible to investigate the processes that occur inside the black box within an organization. According to Parker (2014) & Yanow & Ybema (2009) it is possible to research the processes in the black box of an organization when the complexities and context of these processes are embraced.

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Chapter 2. Accountability and ethics

In order to be able to research accountability and ethics these topics will be outlined in this chapter. First of all accountability will be discussed where instrumental accountability and the relational response-ability is addressed. Secondly, ethical literature is discussed where will be elaborated on contract ethics and virtuous behavior. After that the relationship between accountability and ethics is explained and a framework is constructed. The framework will be used in the case study to find out how these two variables are enacted and enable and/or hinder certain behavior.

2.1 Accountability

Accountability is a general term for any mechanism that makes actors responsive or answerable to those they work with or for. At an individual or organizational level, accountability means the willingness to provide an explanation for an account and accept responsibility (Munro, 1996). The responsibility is an aspect of accountability (Bovens, 1998). Whilst accountability is concerned with the past and thus explain behavior, there is an active aspect of the responsibility called virtue. Virtue is focusing on the future and asks the question ‘What is to be done?’. Ahrens (1996) mentions that there are different styles of accountability within organizations, and it is possible to use it in different ways. This study will focus on the duality between instrumental accountability and the relational response-ability.

Instrumental accountability important by the New Public Management program intended to improve the efficiency of health care (Finn, Currie, & Martin, 2010). The focus is output-related and rewarding, where Dubnick (2005) claims that greater accountability will lead to improved performance. Instrumental accountability relies mostly on quantitative measures

(financial as well as non-financial) which are output-related rather than process-related (Dubnick, 2005). Although lots of studies have been critical against the impact of greater accountability, it is still deeply rooted in organizations (Frey et al., 2013). Instrumental accountability is mostly relying on quantitative and cybernetic systems (Vosselman, 2016). The instrumental

accountability stream which uses the agency theory as dominant theory is referred as ‘calculable accountability’ (Roberts, 2001; Vriens et al., 2016). The agency theory implies that contracts

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between the agent and principal is necessary to mitigate opportunistic behavior, because there is no trust in the other party. The goals of both parties may differ where the principal demands a desired output whereas the agent often would like to take the slightest action to reach output. Individuals want to maximize their utility and therefore it is in the benefit of the principal to implement safeguards against opportunistic behavior (Vosselman, 2016). The agent will act upon the contractual measures and therefore his freedom of action is constrained. The agent is

monitored by the implementation of internal and external controls to decrease the information asymmetry between agent and principal. Information symmetry exists when the agent has relevant information the principals do not have. Incentives is a possibility to make sure that the interest of the principal is met, for example the agent can receive a bonus if a certain target is reached. Another possibility is that the agent can be sanctioned if the target is not met (i.e. being dismissed). Problematic can be if the targets are not achievable the agent may take too much risk to reach the target anyway. Roberts (2001) argues that the assumption of asymmetry in the agency theory is an hierarchical authority relationship. The performance of individuals are affected by external parties and routines of hierarchical processes internally (Roberts, 2001). Instrumental accountability argues that the accounting numbers are the truth because there objective, neutral and passive (Roberts, 1991). However, according to more recent literature accounting cannot be seen as an answering machine (Mouritsen & Kreizener, 2016). The accounting numbers are subjective in a way that the agent (i.e. accountant) has to make judgements in preparing them. Instrumental accountability has its advantages (i.e. it is easy to implement and provides clarity about the accounting numbers) but on the other hand these

numbers are subjective and require a context-specific interpretation (Vriens et al., 2016). Roberts (2001) pleads for an environment where actors discuss issues with each other in order to think about the contribution they make for the organization. In this way there is no focus on the assumptions of the agency theory (i.e. target setting with rewards or sanctions) but creating a narrative (Vriens et al., 2016). This form is not predetermined in reaching targets and following rules but is accounting in the form of a story. A disadvantage of this form is that it requires specific knowledge and experience of professionals to understand the reasons for professional conduct, and therefore not creating enough confidentiality for third parties (Vriens et al, 2016). This dilemma can be solved with an ‘intelligent’ approach to accountability (Roberts, 2009;

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Ellison, 2002; Vriens et al., 2016). This approach claims that there should be trust in professionals by proving the public that professionals are trustworthy (i.e. being honest, reliable and possess the required competence). The intelligent approach does not look at number at a specific moment of time and judge whether they are right or wrong but extents over time. Intelligent accountability stimulates to understand the interdependencies about the numbers. There should be an open culture where communication is easy, meaning less hierarchical (Roberts, 2009). In addition, the intelligent approach stimulates education to develop individuals and assure that the professionals are achieving the societal value they supposed to deliver (Vriens et al. 2016). The judgement of professionals is important to understand the context. The organization should mitigate the bureaucratic targets because this affect the work of the professional negatively (O’ Neill, 2013; Vriens et al. 2016). Thus, intelligent accountability is concerned with the numbers in instrumental accountability but do not entirely rely on these numbers as there should be some trust regarding the professionals (Vriens et al. 2016).

The second approach to understand accountability is in a relational response-ability. Roberts (2001) argue that organizations rely on the discourses to provide for accountability rather than just numbers (financial as well as non-financial). This approach stimulates discussions about what the employees contribute to the organization, and encourage open communication because this will benefit the organization and individuals (Vosselman, 2016; Roberts 2001). In a moral community trust is essential because that is the way individuals’ commitment are enabled, encouraged and mobilized. Here accountability can be seen as a testimony because you do not demand proof but trust the individual that he or she carries out their responsibilities. Individuals will not act because there are extrinsic incentives or expect something in return, this approach looks at accountability as a gift (McKernan, 2012). However that there is a trust-based

relationship does not mean that there is no need for safeguards against opportunistic behavior (Vosselman & van der Meer-Kooistra, 2009). The relational response-ability approach calls for a trust based society where virtuous behavior is implemented.

Messner (2009) raised the question whether accountability is always and unambiguously desirable from an ethical point of view. Messner (2009) provides three reasons why

accountability should not always be desirable. The first reason is that accountable self is opaque. This implies that the one who is accountable cannot fully recall the situations in which one has

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been involved in. For that reason it is not likely that one cannot fully justify the decisions and judgements. Roberts (2009; 2018) claims that it is not possible to be complete transparent, however many still share this ideal. The second reason is that the accountable self is exposed to someone to whom an account is provided (Messner, 2009). This implies that the accountable self’s freedom and privacy is limited. In this way auditors may be more conservative in doing their job because they know they have to justify their actions later to their supervisor. Hoffman and Patton (1997) argue that when someone is fully accountable for his/her actions they will take less risky decisions because of their ability to defend their choices. The last reason is that the accountable self is mediated by a set of social norms that structure the scene of the address (Messner, 2009). This implicates that a person who is held accountable for his or her decisions is affected by other factors. These three limits make it impossible to provide a fair representation of someone’s perception of her-/himself. Thus, it is impossible to have a fully transparent

accountability, and therefore should prefer an imperfect accountability (Roberts, 2018; Messner 2009). This results in still demanding accounts but accept that the accountable self is not possible in providing answers that fully satisfy (Butler, 2005). Above limitations show that accountability is imperfect. A combination of instrumental accountability and relational response-ability is still imperfect because there is no perfect way to implement accountability in an organization.

2.2 Ethics within organizations

Unethical behavior can have big impacts on the organization because it may influence the reputation, financial performance and even the continuity negatively (Kaptein, 2008).

Accountability has an impact on ethical behavior. In essence, behavior that is in line with the contractual agreement (i.e. code of conduct) is considered to be appropriate behavior. These contracts contain safeguards that prevent potential opportunistic behavior (Vosselman, 2016). According to Van Oosterhout et al. (2016) there should be some kind of forgiveness towards the individuals because there can occur unexpected circumstances that affect the contractual

agreements in a negative manner. Humans are bounded rational and intend to act according the contractual agreements but may experience problematic situations. Corporations implement these contractual agreements to comply with laws and regulations, clarifying the organization’s

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employees (Kaptein, 2008). An organization will achieve its objectives more easily when there are reasonable norms and values provided for employees (Kaptein & Wempe, 2002). According to Kaptein (2010) there are three theories distinguished in business ethics namely: virtue ethics, deontological ethics and consequential ethics. Deontological and consequential ethics are focused on contracts so these two theories are merged into ‘contract ethics’ in this study.

Deontological ethics is concerned with the actions that people take. This stream acts upon a moral law which argues that a moral act is ethical right when others would act the same way as you. Consequential ethics focusses on the effects of the actions that people take (Kaptein, 2010). Utilitarianism for instance argue that individuals will join an organization because they pursuit their self-interest and it will give them the greatest pleasure or enjoyment (Kaptein & Wempe, 2002). The reason to join an organization is purely out of self-interest, so there is no search for shared values with an organization and potential employee (Vosselman, 2016). The moral conduct (i.e. self-interest of humans) is the same as contractual agreements. These agreements are

negotiated by humans which are maximizing their utility (i.e. self-interest). The contracts contain safeguards to prevent opportunistic behavior and a kind of forgiveness for unexpected situations (Vosselman, 2016; Van Oosterhout et al., 2006). Van Oosterhout et al. (2016) calls for an internal morality of contracting. So, ethical behavior should not only contain the preferences of the individuals but also rules and regulations on an organizational and institutional level.

Virtue ethics advocate virtuous behavior in a moral community. Kaptein & Wempe (2002) argue that this stream is not concerned with actions or consequences but looks at how people are (i.e. qualities of a person). Morality comes from the inside, because employees intrinsically motivated to act upon the values and principles of the company the employee is working for. Morality will not come from regulations or incentives. This does not imply an altruism but acknowledgement that virtue ethics is concerned with the interdependencies between individuals (Vosselman, 2016). Behavior is not on forehand determined, because it is depended on social relations in specific circumstances. This ethical stream is like trial and error because there may be values that are paradoxical and thus hard to balance with other values and norms. Important is that the individuals have the intention to balance these values and norms. Virtue ethics is aware of organizational and institutional rules and regulations that affect behavior (Vosselman, 2016).

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2.3 Relationship between accountability and ethics

The literature above shows that there is a link between instrumental accountability and contract ethics likewise between relational response-ability and virtue ethics.

Instrumental accountability and contract ethics are connected because both theories call for contracts. Instrumental accountability argue for contracts so employees will reach targets and contract ethics because the employees will act upon the norms and values that are important for the organization. At first sight consequential and deontological ethics argue that contractual agreements are constraints but on the other hand admitting holding on to a simplistic view of the human beings (Van Oosterhout et al., 2006; Kaptein, 2010). Human beings behave

opportunistically and therefore contracts are necessary to mitigate it (Roberts, 2001; Vosselman, 2016). When contracts are used both parties expect advantages and greater effectiveness.

However, there is a possibility that not all expectations will be met with contracts. Van Oosterhout et al. (2016) identified four contracting problems namely; desolation, deception, defeasance and defection. The first problem is desolation which takes into account that human beings are bounded rational and therefore lack information in creating a relationship that both parties will benefit the most from (Van Oosterhout et al., 2016). Deception occurs due to opportunistic behavior of an individual. This happens in a situation where an agent is better informed than the principal during the negotiation of the contract (i.e. information asymmetry). For instance the potential employee already knows that he does not qualify for the terms of the contract. Defeasance occurs contracts cannot take every future account into account. The last problem is defection which refers to when individuals act opportunistically after the contract is negotiated (Van Oosterhout et al., 2016). Thus, ethical contracts (i.e. code of conduct) have their limitations and therefore it should acknowledge that it cannot be fully transparent and need a kind of forgiveness. This can be linked to instrumental accountability where accounting numbers are seen as the truth because these numbers are objective, neutral and passive (Roberts, 1991), but recently acknowledged that these numbers are subjective (Mouritsen & Kreiner, 2016).

Therefore, accounting numbers cannot be fully transparent (Roberts, 2018).

Relational response-ability and virtue ethics are connected because both streams argue for the intentions of an individual or morality of decisions rather than focus on behavior that is in line with the contractual agreements. Giving account cannot be fully transparent because before

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someone is giving account it is affected by the relationship to others and circumstances someone works in (Shearer, 2002; McKernan, 2012). McKernan (2012) calls for accountability as a testimony, which implicates that when someone is giving account it is the truth and should be trusted. In order to be trusted in accounting it is necessary to be accurate and sincere. Sincerity is required for trust, where there is good faith to tell the subjective truth. This can be linked to virtue ethics where Vosselman (2016) argued where morality comes from the inside of a human being. It is necessary that there should be trust in the human to carry out his function well (Kaptein & Wempe, 2002). The relational response-ability approach calls for a trust based society where virtuous behavior is implemented.

2.4 Framework for accountability and ethics

To perform a field study that examines the relationship between accountability and ethics the literature needs to be translated into a framework. The accountability system that is in place in the big four firm is affected by external parties and internally. As mentioned in the introduction the big corporate scandals like Enron have showed that only complying to rules and regulations is not enough. These scandals show the importance of implementing a high standard for their

accountability system and ethical program. It is not enough to only follow the letter of the law for accountants and auditors, but also should not violate the spirit of the law (Duska, 2005). The responsibilities for external auditors are evaluating the financial statements and declaring that it represents a fair picture of a company for the using public, and secondly be a watchdog to detect error, irregularities and/or fraud (Duska, 2005). It is interesting to determine how the increased rules and regulations like IFRS and Dutch GAAP affect the work of an auditor. In addition the supervision of the AFM plays a role in how auditors are acting (Knechel and Salterio, 2017).

In addition, it is important to determine how the big four firm its accountability system is in place to the client. There is a contract with the client which is the basis for the audit

engagement. It is interesting to study whether there is a focus on quantitative measures, which are more easily to the understand by the external environment and the client self (Roberts, 2009; 2018), or on qualitative measurements. Qualitative measures are often seen internally more useful than quantitative measures. Examples of qualitative measures are assessing potential business

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risks for the client due to the changing environment or checking for fraud within the organization (Knechel & Salterio, 2017).

Another perspective useful to find out is how the internal accountability system within the big four firm is established. Does the firm most of the time use quantitative measures to grade the work that is performed meaning that they only look at the hard numbers or does the firm listen to the story behind the numbers. Additionally, it is interesting to determine whether there is an open culture within the big four firm that is less hierarchical (Vriens et al., 2016).

Furthermore, this study is concerned with the ethics within the big four firm. Auditors must be independent and act professional with integrity, an internal ethical culture may strengthen that. The accounting scandals caused a lack of trust in the accounting profession and an internal culture that is strong may gain trust from the public (Benston and Hartgraves, 2002; Kaptein 2008).

The big four firm will have a contractual measurements with its employees to maintain high standards of ethical behavior (Kaptein 2010). The code of conduct within the organization strengthens ethical behavior, it is useful to determine how the code of conduct is used in the organization and what the effects are on ethical behavior. Interesting is to see how ethical

behavior is encouraged within the organization through trainings (Kaptein, 2008). These trainings may help employees become aware of situations that may cause problems in practice, and try to mitigate unethical behavior. Likewise, it is important to determine how the organization is monitoring its employees in behaving ethical and how the big four firm handles unethical

behavior (Kaptein, 2008; 2010). There could be a confidant person within the big four firm where the auditors discuss unethical behavior with. Moreover, the big four firm may mitigate potential unethical behavior during the hiring process by doing back ground checks. During the job interview the organization may use the resume to determine whether the applicant behaved ethical in the past and fits within the norms and values of the big four firm.

In addition, the field study will focus on virtue ethics and the relational response-ability within the big four firm. Due to the accounting scandals it was evident that an ethical culture is from high importance for an organization. External institutions with rules and regulations and internal regulations in a form of code of conduct are not sufficient to diminish unethical behavior. According to the relational response-ability it is of great importance to create trust within the

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organization. Actions of employees are not good nor bad because they are based on the intentions (Vosselman, 2016). However, instrumental accountability and contract ethics demand

justifications for behavior and do not look at the intentions of an individual. For these reasons it is evident to investigate the impact of the accounting scandals in the big four firm during the field study.

The next table is the framework that is used during the field study in determining the relationship between accountability and ethics within a big four firm.

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Framework accountability and ethics

Division of accountability Stream of

accountability or ethics Measurement Internal accountability and ethics Instrumental accountability

- Is the firm internally focused on targets.

- Existence of lots of controls to measure output.

- Possibility to discuss the story behind the numbers and encourage the learning process. Relational

response-ability

- Existence of trust regarding the work that is performed by an auditor internally. Limitations of

accountability

- Existence of accountability limitations internally (opaqueness, take less risky decisions or affected by a set of social norms).

Contract ethics - Existence of a code of conduct.

- Existence of training or e-learning to make sure the auditor does act ethically. - Within the firm an existence of monitoring ethical behavior.

- Existence of a confidant person in case of unethical behavior.

- During hiring process any background checks or checks regarding the resume. Virtue ethics - Existence of a strong internal culture based on trust.

External accountability and ethics to the client

Instrumental accountability

- Existence of a contract with the client.

- Does the contract include quantitative/qualitative measurements.

- Is there a focus on quantitative measurements (i.e. materiality and checking for the hard numbers) or on qualitative measurements (i.e. check for fraud and business risks).

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Relational response-ability

- Existence of trust between the auditor and client. Limitations of

accountability

- Existence of accountability limitations to the client (opaqueness, take less risky decisions or affected by a set of social norms).

Contract ethics - Use of the code of conduct/ principles of the VGBA when performing work for the client. - Existence of safeguards that mitigate unethical behavior.

- Monitoring behavior to be in accordance with the contract. - In case of unethical behavior is there any forgiveness?

Virtue ethics - The effect of contracts between client and auditor on the ethical culture of the organization.

External accountability and ethics to regulatory institutions

Instrumental accountability

- Influence of the accounting scandals on rules and regulations.

- Influence of the regulators on the work as an auditor → more quantitative or qualitative measurements?

- Possibility to discuss the story behind the numbers. Relational

response-ability

- Existence of trust between the auditor and regulators. Limitations of

accountability

- Existence of accountability limitations due to the rules and regulations (opaqueness, take less risky decisions or affected by a set of social norms).

Contract ethics - What kind of contracts are present between the regulator and auditor. - Existence of monitors to check whether auditor comply with these contracts. - What are the consequences for acting unethically.

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Chapter 3. Methods and methodology

Whilst positivistic research understand findings for building theories for the purpose of prediction and explanation, interpretive research is concerned with contextuality which includes why and how questions (Swartz & Yanow, 2013). The goal of this paper is most likely to be achieved with a case study. In this study the relationship between accountability and ethics within a big four firm is highlighted. The big four firm provides mainly their accounting services for global corporations and medium-sized companies. Besides assurance services they provide services for advisory, tax, transaction advisory and core business. The literature review provides a framework of accountability and ethics and how these variables are related. In order to study the relationship between the two variables subjective verbal and non-verbal data is necessary. Interviews will help studying the relationship between accountability and ethics within the big four firm and provide subjective verbal data. This study acknowledges that it is impossible to provide an unbiased and completely objective research. In interpretive research reality is depended on the perception of the researcher and actors that are called upon (Chua, 1987; Schwartz & Yanow, 2013). The results of this study may have been affected by the presence of the researcher within the big four

organization. There may be a wide variety of meanings because interpretation may vary across the hierarchy in the big four firm (i.e. perception of a staff may differ from a partner). The interviews are carried out with the purpose to answer the main question of the paper namely: ‘How are accountability and ethics related and how does that relationship influence behavior in a big four firm?’. The interviews try to identify how the enacted accountability system enables and/or hinders certain ethical behavior.

The main collection of data in this study is via interviews. These interviews are semi-structured, where there is room for deviation for the on forehand formulated questions. Semi-structured interviews have formulated questions and sub-categories (i.e. accountability and ethics related) to create a structure during the conversation with the participant (Bleijenbergh, 2015). By addressing certain sub-categories during the interview, the interviewer is trying to increase the reliability of data collection (Bleijenbergh, 2015). Seven interviews are carried out in the audit department varying from staff to senior manager. All interviews are executed in Dutch and are transcribed in Dutch. Any quotations will be translated into English. When the interviews are

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analyzed there is time for an iterative process. It is important to reflect on interpretations of the researcher in order to prevent misinterpretations of data the interviewee gave (Schwartz & Yanow, 2013). The following table provides in more detail the functions, for how long and when these participants are interviewed.

Participant Function Time Date

Interviewee 1 Senior manager 30 minutes 16-05-2019 Interviewee 2 Senior staff 33 minutes 22-05-2019 Interviewee 3 Senior staff 32 minutes 22-05-2019 Interviewee 4 Senior staff 31 minutes 24-05-2019

Interviewee 5 Staff 31 minutes 29-05-2019

Interviewee 6 Manager 37 minutes 29-05-2019 Interviewee 7 Junior manager 35 minutes 03-06-2019

Lastly, the researcher of this study is an intern at the big four firm which is being studied, therefore the cooperation between the researcher and the big four firm is with ease.

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Chapter 4. Data interpretation

This chapter provides an interpretation based on the interviews that were carried out in the big four firm. The data interpretation shows how accountability and ethics are established and how these two variables are influencing behavior within a big four firm. As described in the previous chapter accountability can influence behavior internally and externally. First of all the internal accountability structure within the big four firm is discussed and how that influences behavior. Secondly, the external accountability structure and ethics are discussed and how it influences behavior, which can be divided into parties regarding the rules and regulations of accounting and the client the firm is working for.

Internal accountability and ethics

In the big four firm both instrumental and relational response-ability are existent. As a result of the scandals like WorldCom and Enron and recent scandals like the money laundering scandal of the Rabobank accountants face increased rules and regulations. These rules and regulations are instrumental accountability. The external parties such as the AFM and the NBA established standards to which the big four firm has to comply with. The big four firm has several internal checks to make sure the audit file is in compliance with the rules and regulations. One internal check according to interviewee 1 is the six-eyed principle.

‘’Work that has been prepared by staff will not directly go into the audit file. The work that has been performed by staff will be checked by a reviewer (most of the time a senior) and also by second level reviewer. In this way you assure that quality of the work that is performed is of high standards and quality. If something does not qualify you can approach that person and have a look at how the mistake happened, so that won’t happen again in the future. If the quality is really low then you have a problem’’ (Interviewee 6).

This internal check works preventive therefore it less likely that your audit file consists errors that may affect the users of the financial statements. The sixed-eyed principle is an instrumental

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check. Another way the big four firm has to prevent internal errors is by making sure that the employees are well educated therefore they can assure the demanded quality by external parties. ‘’We have internal trainings that create an environment where employees can deliver the quality that is expected from them’’ (Interviewee 6).

Another instrumental check that is done yearly to ensure that the audit file consist of high quality is an AQR (audit quality review) and an EQR (engagement quality review).

‘’We have yearly an AQRs, those are yearly quality reviews on different files. One audit file from every partner’s portfolio is taken and then another team from EY offices or countries are going to check whether that audit file is compliant with the standards of quality. You also have high risk profile clients for example a listed company or clients who attracted new financing those have additional conditions they have to comply with, an EQR helps you with these issues. An EQR is an internal reviewer who assists you during the process’’ (Interviewee 2).

‘’If your client is selected for an AQR then you get graded for your work that is performed on a scale of 1-3. If you receive a 3 then you have got a big problem because that signals that you don’t comply with the EY-norms and values’’ (Interviewee 3).

The big four firm improves their audit files via the above mentioned checks. When something went wrong during an EQR or AQR (i.e. receive a bad grade) then the firm does a root call analysis to prevent this from happening in the future. In addition, at staff-level the auditors mostly look at the process of how the error occurred. They admit that it depends on the nature and seriousness of the error but in most the occasions the supervisor start a conversation with the auditor and look at the cause of the mistake and how the big four firm can improve itself.

‘’As a big four firm we are a continuously learning organization, without a doubt there will occur mistakes and then it is the intention to prevent these mistakes from occurring. If something went wrong you want to know how it could have happened, was someone not enough involved, did he

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not have enough reviews, did he most of the time work on his own or was that person not up to date with the rules and regulation? So you want to look at the cause of the mistake’’(Interviewee 4).

Big four firms face an increased demand for high quality. In order to comply with the standards of high quality the auditors need to document every move they make which is a lot more than a couple of years ago. The society expects the auditors to provide complete assurance about the financial statements but that is not possible.

‘’There is a performance gap between expectation of the society and the things an accountant can do. At a certain level there is nothing an accountant can do to improve its quality, of course in many occasions we are not at the level of quality we should be but if we come to that level then there is little we can do. (….) We can check the financial statements of company X but we cannot say with 100% certainty that there is no fraud within that company’’ (Interviewee 2).

The accountant cannot provide full assurance for every single number in the financial statement however this is expected of the stakeholders. The stakeholders have the assumption that when the auditor approves the financial statements it is without fraud.

In the field study it was clear that there is a strong focus on contractual ethics. The big four firm is internally focused on the code of conduct which every employee has to confirm every year. When the employee signs the code of conduct it is expected that he/she knows what is in the code of conduct and that he/she act upon those values. The guidelines that are in the code of conduct of the big four firm should be executed by everyone within the firm. The code of conduct guides behavior across all areas of activity. The 5 main principles in the code of conduct are; working with one other, working with clients and other, acting with professional integrity, maintaining objectivity and independence and respecting intellectual capital (EY, 2019). Even though, every employee confirms the code of conduct, all of the interviewees do not use the code of conduct explicitly during their work as auditor. As interviewee 3 mentions: ‘‘I do not really know what is in the code of conduct explicitly but I think that I possess the general EY values. But it is a good

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thing to show the outsiders what our values are’’. Almost everyone within the big four firm trusts that they will act upon the values that are within the code of conduct.

The VGBA (Verordening Gedrags en Beroepsregels Accountants) are rules regarding how accountants should behave and operate within the profession. An chartered accountant has to take an oath that he or she will always act upon the fundamental principles of the VGBA.

Furthermore; ‘’Even besides your job you have to act professionally that means that cannot do things that may harm the profession. For example, you cannot drink 10 beers and then step in your car and drive home’’ (Interviewee 2). The 5 fundamental principles of the VGBA are that an accountant should always act professionally, integer, objective, competent and careful and

confidential (NBA, 2019). Auditors may face several ethical issues during their job, for instance the client is putting pressure on the auditor in making decisions or self-assessment. If an auditor face ethical difficulties the auditor should always act according to the VGBA, meaning although the client is putting pressure on making decisions the auditor should always remain professional (Interviewee 4).

The big four firm has mandatory e-learning and encourages trainings that advance the desired ethical behavior. In addition, during the education becoming a chartered accountant it is mandatory to follow courses about ethical behavior. An example of a course about ethical behavior is ‘say what you see’. During that course an auditor learns more about the soft skills of people and how to use those skills to remain critical in every situation. For auditors it is

mandatory to report unethical behavior from other employees or clients. There are trainings that improve the critical look on the client and within your team, meaning that an auditor should not agree with everything the client or someone within your team says (Interviewee 2).

Before job interviews the recruiter does some basic background checks, but those are not really profound. For example they check whether you possess a VOG1_{, but most of the time that}

is it (Interviewee 7). The resumes are checked and during the job interview some questions are asked about the resume so the recruiter and manager can picture an image of who you are as person. Almost all interviewees do not know if they had a background check before they became

1_{Verklaring omtrent het gedrag (VOG) is a declaration that past behavior does not affect the function or task that the} potential employee has to fulfil.

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an employee. Many of the interviewees did internships and after that they started working for the organization.

‘’When someone is doing an internship within the organization we can easily see if the person fits within our organization. During that internship we can observe how the person is acting

professionally and if he is not acting professionally then it is likely that the intern is not hired’’ (Interviewee 7).

Although there are rules regarding ethics (i.e. code of conduct and VGBA) almost every interviewee mentioned that the internal culture has a big impact on how to behave within the organization. It is self-evident that no one is discriminating other employees or clients

(Interviewee 3) and as an auditor there is a desire to behave in line with the norms and values of the organization (Interviewee 7). If an unethical situation occurs then the employees within the organization will give notice about the unethical act.

‘’ If someone is making a discriminating comment to anyone then you will get notice that you should not do that again otherwise you will face some serious consequences’’ (Interviewee 3). If an auditor experiences unethical behavior within the organization then it is possible to report this anonymously to a confidential person. This is a special department that handles unethical behavior.

The big four firm consists mostly of calculable accountability meaning that an auditor has to reach its targets and intelligent accountability because there is an open culture with less

hierarchy that strives to solve errors regarding the work that is performed. Even though the employees have to sign the code of conduct there is a strong internal culture that motivates the employees. The big four firm strives to have an open culture where hierarchy is diminished. Since the beginning of 2019 the employees are working at a new office which is boosting the employees with new energy. The new office does not have special departments for staff and there are no rooms for the partners and managers but there is one big flex space, every employee can sit wherever he or she would like to. Interviewee 7 (manager) thinks that this makes it easier for staff to ask questions or sit next to partners. It boosts your motivation to work hard for the firm

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because everyone can see what you are doing, in the past it was possible to hide behind your desk. The office creates an energy that auditors show what they have got and work hard (interviewee 1, 6 & 7) Within the organization the big four firm is trying to implement an environment that is in line with the relational-ability and virtue ethics.

‘’As a team we have a big joint sense of responsibility to do the good thing for the client and (…) you cannot know everything about the law and regulation that is why you have a team where you discuss and solve problems together. It is also not that hierarchical because when I was a staff I could ask questions to the manager and partner. When I had issues during the audit then the team was trying to help you solve them’’ (Interviewee 7).

In addition, the internal culture within the big four firm is boosted with the activities the auditors plan. For example every year there is an sport event within the big four firm. Another activity every annual layer of employees plan outside the working hours activities is a weekend abroad. Therefore working for a big four firm is more than just achieving goals for the client, it creates new friendships (Interviewee 6).

Another way the behavior of the employees is influenced is by the education every employee had. Every employee has an economic or accountancy background and therefore the employer trusts that the employees possess the norms and values the firm wants to act upon. In addition, almost every employee who start at the big four firm will begin with their post master to become a chartered accountant. The post master will teach auditors ethical values that are

important in the field of accountancy, and trust that the auditor will act upon these values (Interviewee 7). Although an employer never can be sure that an employee will act upon the values that are important for the big four firm, the employee trusts that the employee will act upon the values the big four firm tries to live up to after a positive job interview (Interviewee 1,4 & 7).

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External accountability and ethics

External accountability is divided into how the auditor is accountable to their clients and the compliance with rules and regulations from regulatory institutions.

Regulatory institutions

The audit department is mainly supervised by the AFM which is an external regulator. The regulators are supervising the auditors to create trust for the users of the financial statements, in other words check if the work that is performed by auditors is done properly. The AFM is trying to restore the trust in the accounting profession as a consequence of the big accounting scandals. However, it is questionable if the AFM is achieving this because the accountancy firms are most of the time in a negative manner in the news (Interviewee 1). Almost every year the AFM is increasing the requirements an audit has to comply with, therefore it is hard for an accounting firm to stay away negatively in the news even though the quality of an audit has increased tremendously. As Interviewee 1 states: ‘’For example if the index is 100 then I think we are now at 200, but were the norm of the AFM was 100 it could now be 220. So we have improved significantly but it is not good enough. Of course it is possible to improve but at a certain point you have to ask yourself is it worth the effort to keep improving the way you have to document your work.’’

The AFM used to check the audit files and if it was not good enough then the accounting firm can expect a warning or fine. Recently, the AFM acknowledged that they want to look at the

circumstances that caused the mistakes in the audit files. Meaning that there is a shift from only looking at targets (i.e. is the audit file sufficient), which is instrumental, to look at the causes of incorrectly performed work, which is an aspect of intelligent accountability.

‘’The AFM did a root call analysis to see why some activities were not carried out or performed incorrectly. The lack of employees was literally mentioned in the Financieel Dagblad2_{as a cause.}

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The AFM acknowledges this and report more to the causes of inconsistencies in the audit files’’ (Interviewee 6).

Nowadays the rules and regulations auditors are facing have a great impact on the workload. Furthermore, the amount of hours increased significantly. For instance interviewee 1 (senior manager) said: ‘’A couple of years ago we needed around 1000 hours to complete an

engagement, nowadays 1500-2000 hours are necessary to complete the engagement.’’

As a consequence the big four firm is decreasing its clients to ensure that they can maintain high quality and work more efficient for the remaining clients (Interviewee 6).

The auditors acknowledge that the increased rules and regulation will lead to higher quality. The downside is that profession is becoming too focused on rules and regulations, even the client is not able to see the added value of some extra tests the auditors have to do. A reason for implementing new rules and regulations is the lack of trust due to the accounting scandals. As interviewee 7 illustrates: ‘’We need to find a balance between ensuring high quality in the audit and the introduction of additional rules and regulations. The public opinion is that we need to investigate every nitty gritty thing, so there is an expectation gap we need to fix.’’

The accounting profession changed over the years. There is a shift from focusing on the ‘hard’ numbers and figures in the financial statements to focus more on qualitative aspects like fraud and continuity risks (Interviewee 4).

‘’The NBA3_{introduced 53 measurements for the public interest to increase the quality of an audit}

of the financial statements. The NBA came with controls for corruption and what the role for the accountant is’’ (Interviewee 4).

Furthermore, external regulators are pressuring accounting firms because they can appear at the organization and review the audit files. As these inspections are unexpected the auditor has to make sure that their audit files consist of high quality and comply with rules and regulations.

3_{Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA) is a professional organization for the} accountants in the Netherlands.

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Maintaining the high standard of quality takes a lot of time. As an example: ‘’Due to the

unexpected quality reviews we are more concerned with risks that may affect the client but I think we are exaggerating because you know you may be inspected. For instance something is 10 above materiality so it actually does not affect your judgement and thus pass on further work but because you may get inspected you do a lot of extra work’’ (Interviewee 3).

The increased rules and regulations about how to account for the work an auditor performs show that the big four firm is mainly focused on instrumental accountability. The big four firm has to comply with the rules and regulation from external regulations, therefore it is inevitable that the big four firm has to rely on instrumental accountability and contract ethics. It is hard for a big four firm to implement new technologies of data analytics, due to the fact that they are uncertain if the external regulator approves that technology. Even though it will decrease the workload of the auditors meaning more emphasize on other aspects that improve the quality of the audit, the auditors depend on the approval of the external regulator (Interviewee 1).

Accountability to the client and ethics

The accountability to the client is based on a contract. This contract contains of responsibilities of both parties along with the fee. The responsibility of the big four firm is checking whether the financial statements are in line with law and regulations, if the financial statements contain material deviations and all other information that is required by Burgerlijk Wetboek 2 Titel 9 (Dutch laws and regulations). Based on that information the accountant will give an independent opinion on the financial statements. The main responsibility of the client is ensuring the financial statements are complying with rules and regulations (i.e. IFRS or Dutch GAAP). In addition, the client needs to provide the audit team with documents they need to perform their work.

Furthermore, the working conditions are included in the engagement letter, the audit team requests for a workplace that is adequate to prevent RSI and other illnesses. Lastly, there are measures included when one of the parties violate the terms of the contract. These contracts are full of measurements, making sure the auditor will behave in the way expected by the client and regulator. These measurements try to mitigate opportunistic behavior, act independently, assure high quality and safeguard against regulators (Interviewee, 6).

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It is of high importance for the big four firm to deliver high quality, otherwise the firm can get in trouble with regulatory institutions (i.e. AFM). In the engagement letter the fee for the engagement is determined. Even though there is a fixed fee, the big four firm does not stop finding evidence supporting the financial statements if the maximum of the fee is reached. ‘’The work that we have to perform has to be of good quality and afterwards we have a look at issues like; hey shit we have 50.000 overrun, we need to get that billed. The commercial picture is less prioritized nowadays and that is a good thing’’ (Interviewee 6).

All the evidence the auditor receives from the client has to be confirmed, thus does the evidence come from the client its internal system. It may be the case that internal auditors change figures, although it is unlikely that those occasions happen. As an auditor you have the responsibility to assure that the evidence comes from their internal system.

‘’I would rather walk 6 floors and check for myself if the evidence comes from their own internal system’’ (Interviewee 5).

Although there is a focus on instrumental measures in the contract between the auditor and the client most of them do not think that it is necessary in every single case. All the things an auditor does for the client has to be recorded in the audit file and sometimes the auditor carries too much work out in finding evidence because the auditors are afraid of the regulator’s opinion about their decisions. Even though an amount is under materiality (i.e. you can agree with that amount and pass on to further work) many auditors are afraid of missing evidence. In their opinion the auditors should be trusted for the decisions they make because they are professionally educated. Nowadays we have a culture that is afraid of making mistakes and therefore fill in more and more checklists’’(Interviewee 3).

‘’We need to find a kind of balance, so if we find evidence that is sufficient to go left for example then you should not keep doubting about that decision because the regulator may think that it is not the right decision. Nowadays we are afraid of making decisions and therefore we are

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checking with the whole team to see if everybody agrees with a decision, before we can move on. This is not the way we should want it to be. (…) We are professionally educated so at a certain point it is okay to have your own opinion’’ (Interviewee 7).

Another instrumental accountability measure is used for the integrity and independence of an auditor. Every year, all the auditors within the big four have to fill in a form which declares their independency regarding the clients they provide services for (Interviewees 1, 2, 3, 4, 5, 6 & 7). In these forms an auditor has to notify if their family or the auditor self is involved in any of the clients of the big four firm. If there is any association with a client then it is not allowed for the auditor to perform work for that client. It is not allowed for an auditor to receive price cuts on the service or goods the client provides or manufactures (Interview 1). Another way to avoid

problems regarding independency is rejecting gifts from clients, to a certain amount it is allowed to accept gifts but most of the employees do not accept any kind of gift.

‘’I always try to be objective and independent. For example, if I have to count the inventory at the client and I have to wear gloves because we have to hold steel bars I do not take these gloves home. Even though the client says you can have these gloves and use them for work in your garden. I want avoid any circumstance that may cause problems regarding my independency even though it is allowed according to the VGBA’’ (Interviewee 5).

The financial statement audit is largely focused on instrumental accountability, in particular with public listed companies you have strict deadlines in delivering and signing the audit of the financial statement. In addition, the measurements that are used to complete the audit are mostly calculable (Interviewee 4). However, nowadays there is more focus on business risks and fraud which are more qualitative, as these areas are not easily quantifiable. Management override is a typical example of fraud, entries are manipulated so the numbers in the financial statement look better.

The items mentioned above show that the accounting scandals have an impact on the work of an auditor. Nowadays there is more focus on documenting evidence extensively, all this received

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evidence has to be documented in line with strict requirements otherwise that may result into a wrong interpretation. A couple of years ago it was allowed to agree on small things orally with the client and then sign it (interviewee 1). Every interviewee is in agreement with the changes in the profession because the quality of the audit is improved significantly. However, in some occasions the auditors think that the new laws and regulations exceed its purpose (interview 1).

Chapter 5. Discussion and conclusion

This study shows how accountability and ethics are related and how this relationship hinder and or renders behavior within a big four firm. This chapter will discuss the findings for the big four firm that is studied and provides more general conclusions. This study was carried out in the audit department of a big four firm. The organization mainly provides their accounting services for global corporations and medium-sized companies.

The accounting scandals have had a big impact on the accounting profession as it

increased rules and regulations and reformed the role of auditors into being more of a watchdog. The auditors need to detect errors irregularities and/or fraud (Benston and Hartgraves, 2002; Duska, 2005). The purpose of the implementation of more rules and regulations is that it has to improve the accounting firm its accountability and ethics program. The increased rules and regulations is a good thing, as it does increase the quality of the audits. However, at a certain point it is questionable if it would lead to better behavior (Interviewee 1 & 7). The big four firm is spending most of its time complying with the rules and regulations, which are instrumental measurements, that show the public interest whether the auditors performed well or not

(Interviewee 6). The big four firm usually does not hire clients that have been in the news due to fraudulent transactions because the firm does not want to be associated with that kind of behavior as there already is a lack of trust in accounting firms (Interviewee 1,6 & 7). Within the firm itself there is a six-eyed principle checking other employees work if it is compliance with the high standards of quality. If it does not qualify then the auditors have a look at how the error occurred. Within the team there is a sense of joint responsibility to complete the audit, maintaining a high quality and that is why the teams have meetings about things that could be improved (Interviewee 6 & 7). In addition, once in a while there is feedback Friday where every auditor can address problems and or areas that have room for improvement (Interviewee 1). During those sessions

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there is room for discussions on the level of accountability likewise for ethical issues

(Interviewee 1 & 6). Above indicates that there is a strong focus on calculable accountability with room for intelligent accountability to keep improving continuously.

The way accountability is shaped within the big four firm directly influences the ethical culture. The ethical culture is influenced by contracts (i.e. code of conduct). The contracts contain safeguards to prevent opportunistic behavior and a kind of forgiveness for unexpected situations (Vosselman, 2016; Van Oosterhout et al., 2006). Van Oosterhout et al. (2016) calls for an internal morality of contracting meaning that behavior should not only contain the preferences of the individuals. There should be a focus on rules and regulations at an organizational and institutional level. This may create a relationship that create benefits that would not exist without the contract. Most of the interviewed auditors do not know what is in the code of conduct

explicitly but do feel that they possess the general values to act ethically. The auditors mention that they are educated academically, therefore do possess values that are important to work as an auditor, for instance being critical (Interviewee 3,4 & 6). The VGBA has an important role in assuring that the auditors act ethical, if auditors violate principles of the VGBA then in the worst case the auditor is dismissed. According to Van Oosterhout et al. (2006) there are four issues that make contracts not effective. The first problem is that humans are bounded rational which

implicates that individuals lack information in creating the best relationship. Secondly, deception may occur due to opportunistic behavior of an individual. Defeasance occurs because contract cannot foresee every single future account. Lastly, defection occurs when an individual will act opportunistically after the contract is negotiated. It is never possible to guarantee the hired person will keep acting ethical in the future. For instance after a few months the hired person will show his true colors and show that he does not qualify for the terms of the contract (Interviewee 6). That is why there should be forgiveness towards the auditors because contracts cannot cover everything. The big four firm does have a kind of forgiveness towards the auditors, however, it is depending on the situation (interviewee 1,2,3,4,5,6 & 7).

It is difficult to determine whether there is a big influence of the relational response-ability and virtue ethics on behavior because the organization focuses mostly on instrumental accountability and contract ethics. However, the big four firm is trying to create an internal culture where employees are intrinsically motivated to achieve goals. The big four firm wants to

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achieve this by trusting the employees to a certain extent as the big four firm has to comply with the high standards of quality and act in accordance with the VGBA and code of conduct. Within the audit teams there is more trust regarding the tasks the auditors have to perform. As a result of the education the auditors it is assumed they will not do anything that may harm the profession. In general it is not possible to have a relational response-ability community between client and auditor because the rules and regulations from external parties make it impossible to create a trust-based relationship.

The big four firm possesses characteristics from intelligent accountability. The big four firm stimulates every auditor to do a post master in becoming a chartered accountant. Accomplish the post master signifies that the auditor possesses the required competence. Furthermore,

auditors have to take an oath they will always act in accordance with the fundamental principles of the VGBA (Roberts, 2009; Ellison, 2002; Vriens et al., 2016). In addition, intelligent

accountability is present internally, as the auditors strive to have an open culture and diminish hierarchy. When a mistake is made the supervisor will have a conversation on how it occurred and how it can be avoided in the future. However, the increased rules and regulations and the lack of trust in auditors make it hard to put the bureaucratic goals at the background. The interviewees feel pressure for generating high quality and complying to the rules and regulations. The external parties (i.e. the AFM) and the stakeholders require assurance in the form of documents, such as independence, integrity and evidence that there are not material misstatements in the financial statements. According to Roberts (2009) and Vriens et al. (2016) narrative accountability is hard to report as this requires specific knowledge and experience of professionals to understand the reasons for professional conduct, thus not creating enough assurance for external parties. Additionally, the ethical culture cannot be fully focused on trust because there are rules and regulations that require certain behavior. The rules and regulations set standards for what is ethically right. Even though the big four firm is trying to create a strong internal culture based on trust, instrumental accountability and contract ethics mainly influence behavior.

Overall this study shows that the accountability system, which is heavily influenced by rules and regulations from external institutions, is affecting the ethical culture within the firm. A trust-based relationship is impossible between the client and auditor as a result of the rules and regulations the big four firm has to comply with. Therefore, it is most likely that the

"Accountability and ethics in a big four organization A case study which discusses the role of accountability and ethics within a big four organization and how these variables influence behavior. "